The restructuring of South Korea’s over-the-top (OTT) streaming market faces a critical juncture as merger talks between two major local players, TVING and Wavve, have stalled after nine months of negotiations. This development, reported by Ilgan Sports on September 3, 2024, highlights the challenges faced by domestic platforms in their bid to compete with global streaming giants like Netflix.

Merger Talks in Jeopardy

TVING, backed by CJ ENM and JTBC, and Wavve, supported by SK Telecom and the three major terrestrial broadcasters, announced their intention to merge in December 2023. The proposed union aimed to create the largest domestic OTT service capable of rivaling Netflix in the Korean market. However, industry sources reveal that the first and second rounds of negotiations have effectively been nullified, with the merger now at risk of collapse unless new proposals emerge.

Investment Disagreements

A key stumbling block in the negotiations appears to be disagreements over investment scale. An industry insider commented, “SK made significant investments in the terrestrial broadcasters during Wavve’s launch. It seems CJ is not willing to match that level of investment.” This disparity in financial commitments has created tension between the potential partners.

Performance Disparities

The differing financial performances of the two companies have further complicated merger talks. TVING has shown promising results, reducing its operating losses by approximately 75% year-on-year in the second quarter of 2024. In contrast, Wavve continues to struggle without clear signs of improvement.

Netflix’s Aggressive Strategy

Amidst these domestic challenges, Netflix has intensified its efforts to secure content supply contracts with Korean broadcasters. This aggressive move by the global streaming giant threatens to further erode the market position of local OTT services.

Broadcasters’ Decision Crucial

Analysts suggest that the fate of the TVING-Wavve merger ultimately lies in the hands of the broadcasting companies. “The broadcasters know that merging is the only viable solution, but they appear to be weighing immediate profits against long-term strategy,” an industry expert noted.

Market Implications

As the Korean OTT market stands at a critical crossroads, the outcome of the TVING-Wavve merger negotiations is expected to have significant implications for the future landscape of the streaming industry in South Korea. The ability of domestic platforms to unite and compete effectively against global players like Netflix remains uncertain, with the decisions of key stakeholders poised to shape the market’s direction in the coming months.